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Leslie Daff, JD, MBA - Orange County Estate Planning Lawyer

Wednesday, April 8, 2009

Charitable Gift Annuities: A Way to Both Give and Receive

A Charitable Gift Annuity is a way to benefit your favorite charity and in return receive a guaranteed income for life. After you pass away, any amount remaining from your initial contribution passes to the charity.  

A Charitable Gift Annuity enables you to:
     ·        Receive fixed income for life
     ·        Obtain an immediate income tax deduction
     ·        Benefit from annuity rates ranging from 5%
          to 9.5%
     ·        Receive partially tax-free income
     ·        Defer capital gains tax on appreciated
     ·        Support your favorite charity
Charitable Gift Annuities are not insured. However, many charities retain ample annuity reserve funds from which to pay the annuities.
To set up a Charitable Gift Annuity, a donor contributes cash, stock, or other assets to the charity and receives an annuity based on the donor’s age. The current annuity rates published by the American Council on Gift Annuities are as follows:                      

Donor’s Age
Charitable Gift
Annuity Rate


Generally, 30% to 50% of a donor’s capital gain will escape capital gains tax entirely. The remaining capital gain will be reported in small annual installments as part of the donor’s annuity payments.
Charitable Gift Annuities can also be structured to provide annuity payments for other beneficiaries you name. So a Charitable Gift Annuity can be a valuable estate planning tool. Not only can a donor contribute assets that have appreciated in value but bring in minimal income, the donor and/or other beneficiaries the donor names receive fixed annuity payments, and the donor has reduced the size of his or her estate.

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